Manufacturing continues its fragile expansion

Manufacturing continued a small but steady expansion in December, with a measure of activity in the industry recording its best performance in two years.

The BNZ-Business NZ performance of manufacturing index lifted one point from November to 52.9, with a reading above 50 indicating manufacturing is generally expanding.

December was the fourth month with a positive reading, following 16 months that showed decline.

Business NZ chief executive Phil O'Reilly said the level of expansion was still fragile, with continued expansion in 2010 partly dependent on the direction of the New Zealand dollar. Comments from respondents indicated further demand from Australia might help lift activity levels, he said.

BNZ senior economist Craig Ebert said that in the closing months of last year the manufacturing sector looked to be expanding for sure, for the first time since 2007.

Among the seasonally adjusted breakout indices from the main index, production at 54.1 and new orders at 57.2 had their best readings since November 2007, while employment on 48.7 remained in contraction.

Manufacturing by industry sub-groups was mostly expansionary in December, led by the food, beverage and tobacco sector with a reading of 60, although that was down on November. Petroleum, coal, chemical and associated products lifted to 59.4, but contraction was shown by metal product manufacturing on 48.2 and machinery and equipment on 45.8.

- NZPA